Procurement Guidelines Report Procurement Guidelines Report

Transcription

1 Procurement Guidelines Report For the Period 01 April March National Grid 1 April 2015

2 CONTENTS Page Executive Summary Introduction Purpose of the document Reporting Period Procurement of System Management Services Definition of System Management Services System Management Services Procured... 5 Service Component Table 1 1. Operating Margins (OM) 6 2. Constrained Storage Shrinkage Entry Capacity Management Exit Capacity Management Gas Balancing OCM Collateralisation Costs National Grid 2 April 2015

3 Executive Summary National Grid has been given discretion with regard to the procurement of System Management Services, subject to an obligation under its Gas Transporter (GT) License to operate the system in an efficient, economic and co-ordinated manner, and taking into account its (System Operator) SO incentives. National Grid confirms that System Management Services during the period covered by this report have been procured in accordance with the principles set out in the prevailing Procurement Guidelines, and therefore National Grid Gas considers that such activities satisfy its relevant License obligations National Grid 3 April 2015

4 1. Introduction 1.1 Purpose of the document This document is the Procurement Guidelines Report ( Report ) which National Grid is required to publish in accordance with Special Condition 8a of its GT licence. This Report provides information in respect of the procurement of System Management Services referred to in the Procurement Guidelines. The Procurement Guidelines set out the kinds of System Management Services which National Grid may be interested in purchasing, together with the mechanisms by which National Grid envisages purchasing such services. This Report, which has been developed in consultation with the Authority, covers each of the services detailed in Table 1 of the Procurement Guidelines, and identifies contractual and marketrelated information for each of the services. Terms used within this report shall have the same meaning given to them in National Grid s GT Licence and the Uniform Network Code, as the case may be. Further copies of this Report may be obtained from Or from: Paul Gallagher National Grid Warwick CV34 6DA Paul.Gallagher@nationalgrid.com 1.2 Reporting Period This Report has been prepared in accordance with Part B of Special Condition 8a This Condition states that the Report should be produced within one month after the publication date of the Procurement Guidelines which are prepared in accordance with Part B of this Condition. The report includes details of System Management Services procured in relation to the gas flow period 1 April 2014 to 31 March 2015 inclusive. This reporting period covers the last month of the Storage Year 2013/2014(April 2014) and the majority of Storage Year 2014/2015 May 2014 to March 2015) National Grid 4 April 2015

5 2. Procurement of System Management Services 2.1 Definition of System Management Services Special Condition 8a Part K of National Grid s GT Licence defines the System Management Services as the services in relation to the balancing of gas inputs to and gas off takes from the NTS and includes balancing trades and balancing trade derivatives and constraint management services. Table 1 in the Procurement Guidelines Report summarises the above System Management Services as being required for the following applications: 1. Operating Margins Gas 2. Constrained Storage 3. Shrinkage 4. Entry Capacity Management 5. Exit Capacity Management 6. Gas Balancing 7. OCM Collateralisation Costs 2.2 System Management Services Procured The services National Grid procured in this period are summarised in Table National Grid 5 April 2015

6 1. Operating Margins (OM) The purpose of an OM system management service is to ensure Operational Balancing capability in the event of a supply failure, demand forecast change or plant failure. In addition, a quantity of OM is held in reserve to manage the orderly run-down of the system in an emergency. Service Component Holdings Contracts (space and deliverability) National Grid (OM) procures this service at the following storage facilities: NG LNG storage facilities (Avonmouth) Dragon LNG Rough storage facility Hornsea storage facility Hole House Farm storage facility Hatfield Moor storage facility Humbly Grove storage facility Grain LNG Importation terminal Aldbrough Storage Facility At National Grid LNG storage facilities, National Grid (OM) has priority over all other Users in procuring Storage Capacity for OM purposes. However, at Dragon LNG, Grain LNG, Rough, Hornsea, Hatfield Moor, Humbly Grove, Aldbrough and Hole House Farm, National Grid (OM) has the same rights as any other User National Grid 6 April 2015

7 1. Operating Margins (OM) The purpose of an OM system management service is to ensure Operational Balancing capability in the event of a supply failure, demand forecast change or plant failure. In addition, a quantity of OM is held in reserve to manage the orderly run-down of the system in an emergency. Service Component Holdings Contracts (space and deliverability) Continued For the period 1 April March 2015, National Grid Gas (OM) procured Operating Margins as follows: Facility Space Unit cost (p/kwh/annum) Deliverability (kwh/d) Unit cost (p/kwh) Hole House Farm 33,000, Hatfield Moor 3,900, Rough 443,900, Apr-14 Hornsea 100,000, Aldbrough 35,550, Humbly Grove 31,115, Avonmouth 115,330, Hole House Farm 35,000, Hatfield Moor 10,000, May-14 to Mar-15 Rough 443,900, Hornsea 100,000, Humbly Grove 69,639, Avonmouth 209,697, Apr-14 to Dec-14 Isle of Grain 131,000, Jan-15 to Mar 15 Isle of Grain 131,000, National Grid 7 April 2015

8 1. Operating Margins (OM) The purpose of an OM system management service is to ensure Operational Balancing capability in the event of a supply failure, demand forecast change or plant failure. In addition, a quantity of OM is held in reserve to manage the orderly run-down of the system in an emergency. Service Component Holdings Contracts (Delivery Arrangements) National Grid Gas (OM) procures demand reduction and supply increase services for OM provision. For the period 1 April March 2015, National Grid Gas (OM) procured Operating Margins as follows: Contract OM Deliverability (kwh/d) Price (p/kwh/d/annum) Apr-14 May-14 to Mar- 15 LNG Importation with Storage 33,999, Single Demand Reduction Point 24,000, Demand Portfolio 14,000, Supply and/or Demand Portfolio 25,200, LNG Importation with Storage 60,000, LNG Importation with Storage 60,000, LNG Importation with Storage 22,788, LNG Importation with Storage 59,465, Single Demand Reduction Point 33,500, Primary Capacity Holder of LNG Importation with Storage 24,840, Supply and/or Demand Portfolio 23,000, National Grid 8 April 2015

9 1. Operating Margins (OM) The purpose of an OM system management service is to ensure Operational Balancing capability in the event of a supply failure, demand forecast change or plant failure. In addition, a quantity of OM is held in reserve to manage the orderly run-down of the system in an emergency. Service Component Gas-in-storage Swap tender National Grid Gas (OM) utilises this service to address OM gas surpluses and deficits. National Grid Gas (OM) issues a swap tender to Users, offering to trade gas in store at a facility where National Grid Gas has an OM surplus for shipper gas in store at a different facility where there is an OM deficit. Users may offer a payment to National Grid Gas or receive a payment from National Grid Gas, reflecting the different injection values attached to the gas. No Gas-in-storage SWAP tenders have been made between 1 April 2014 and 31 March National Grid 9 April 2015

10 1. Operating Margins (OM) The purpose of an OM system management service is to ensure Operational Balancing capability in the event of a supply failure, demand forecast change or plant failure. In addition, a quantity of OM is held in reserve to manage the orderly run-down of the system in an emergency. Service Component Gas Procurement National Grid Gas (OM) utilises this service to address an Operating Margins gas deficit at a given storage facility where National Grid Gas holds Operating Margins Capacity Arrangements. National Grid Gas (OM) either issues a tender to Users to meet its requirements or injects gas that has been withdrawn from storage facilities with an Operating Margins gas surplus. Typically, National Grid Gas invites Users to offer to sell gas either in store or at the NBP although National Grid Gas may contract for the purchase of OM gas (as to all or any part of its requirements). For the period 1 April March 2015, National Grid (OM) procured this service as follows: Facility In-store quantity NBP quantity In-store weighted average price (p/kwh) NBP weighted average price (p/kwh) May-14 Humbly Grove 38,523, May-14 to Nov-14 Avonmouth 8,528,460 85,164, National Grid 10 April 2015

11 1. Operating Margins (OM) The purpose of an OM system management service is to ensure Operational Balancing capability in the event of a supply failure, demand forecast change or plant failure. In addition, a quantity of OM is held in reserve to manage the orderly run-down of the system in an emergency. Service Component Gas Disposal National Grid Gas (OM) utilises this service to address a gas surplus at a given storage facility where National Grid Gas holds or has held Operating Margins Capacity Arrangements. National Grid Gas (OM) either issues a tender to Users to meet its requirements or withdraws gas to inject into storage facilities with an Operating Margins gas deficit. Typically, National Grid Gas invites Users to bid to buy gas either in store or at the NBP. For the period 1 April March 2015, National Grid (OM) procured this service as follows: Facility In-store quantity NBP quantity In-store weighted average price (p/kwh) NBP weighted average price (p/kwh) May-14 Aldbrough 27,450, National Grid 11 April 2015

12 1. Operating Margins (OM) The purpose of an OM system management service is to ensure Operational Balancing capability in the event of a supply failure, demand forecast change or plant failure. In addition, a quantity of OM is held in reserve to manage the orderly run-down of the system in an emergency. Service Component OM Transfer between Storage Facilities National Grid Gas (OM) utilises this service to address a gas-in-store surplus or deficit by transferring OM gas between Storage Facilities. For the period 1 April March 2015, National Grid (OM) procured this service as follows: Facility From Facility To In-store quantity In-store weighted average price (p/kwh) May-14 Aldbrough Hole House Farm 2,000, Aldbrough Hatfield Moor 6,100, OM Utilisation National Grid Gas (OM) utilises Operating Margins services to ensure Operational Balancing capability in the event of a supply failure, demand forecast change or plant failure. No Utilisations have occurred between 1 April 2014 and 31 March National Grid 12 April 2015

13 2. Constrained Storage Procurement Guidelines Report The purpose of a constrained storage service is to economically meet 1 in 20 capacity obligations at the Network extremities. For the period 1 April March 2015 Facility Shipper Booked Deliverability Transportation Credit (p/kwh/day) May 2014 to March 2015 Avonmouth LNG 0 N/A 2015 National Grid 13 April 2015

14 3. Shrinkage The NTS Shrinkage Provider manages the risk exposure associated with the shrinkage account. Shrinkage covers gas for own use (running of compressors, vented gas, gas used for preheating) and to cover any gas losses (unidentified theft, meter errors, leakage and CV shrinkage associated with variations in calorific value of gas). The account is subject to normal cash-out arrangements if the daily gas quantities delivered to the system do not match the Daily Shrinkage Quantities. National Grid manages this service by trading gas at the beach or at the NBP, following the approval of Network Code Modification Proposals 0579 (Feb 2003) and 0599 (April 2004) Service Component NBP Trades For 1 April 2014 to 31 March 2015, National Grid procured NTS shrinkage via NBP trades as follows: Total Quantity Purchased Purchase Cost ( ) Weighted Average Purchase Price (p/kwh) Total Quantity Sold Sell Revenue ( ) Weighted Average Sell Price (p/kwh) Apr ,437,553 6,797, ,992,472 1,181, May ,394,849 6,986, ,861,420 86, Jun ,463,087 6,162, ,062,395 1,412, Jul ,247,476 5,857, ,869, , Aug ,773,738 4,790, ,194, , Sep ,108,468 4,995, ,594, , Oct ,958,596 7,645, ,930,710 50, Nov ,246,669 7,166, ,891, , Dec ,132,762 7,395, ,791, , Jan ,547,048 8,786, ,672, , Feb ,784,430 7,936, ,591,599 2,098, Mar ,115,397 8,876, ,729,769 3,001, National Grid 14 April 2015

15 3. Shrinkage The NTS Shrinkage Provider manages the risk exposure associated with the shrinkage account. Shrinkage covers gas for own use (running of compressors, vented gas, gas used for preheating) and to cover any gas losses (unidentified theft, meter errors, leakage and CV shrinkage associated with variations in calorific value of gas). The account is subject to normal cash-out arrangements if the daily gas quantities delivered to the system do not match the Daily Shrinkage Quantities. National Grid manages this service by trading gas at the beach or at the NBP, following the approval of Network Code Modification Proposals 0579 (Feb 2003) and 0599 (April 2004) Service Component Imbalance Cash-out From 1 April 2014 to 31 March 2015, National Grid s imbalance cash-out for the NTS shrinkage account was as follows: Total Quantity Purchased Purchase Cost ( ) Weighted Average Purchase Price (p/kwh) Total Quantity Sold Sell Revenue ( ) Weighted Average Sell Price (p/kwh) Apr-14 11,710, , ,495,344 58, May-14 18,863, , ,829,526 57, Jun-14 40, ,968, , Jul-14 21,518, , ,135,458 38, Aug-14 4,202,620 58, ,181, , Sep-14 10,137, , ,298,096 68, Oct-14 13,771, , ,540,825 26, Nov-14 6,738, , ,879,502 71, Dec-14 5,421, , ,791,894 68, Jan-15 3,329,096 53, ,022, , Feb-15 4,913,146 86, ,172,615 86, Mar-15 5,794,226 95, ,346,158 99, National Grid 15 April 2015

16 4. Entry Capacity Management The purpose of an entry capacity management service is to enable National Grid Gas to efficiently manage entry capacity rights. Entry capacity holdings may need to be reduced to either efficiently manage capacity risk exposure or to reduce holdings, and thereby manage flows onto the system. National Grid Gas may buyback entry capacity from Users via the Gemini entry capacity system or it may enter into Capacity Management Agreements (CMAs). National Grid may develop further services or enter into contracts that will enable it to better manage both its operational and commercial risks. Service Component Buybacks on Gemini For the period 1 April March 2015, National Grid Gas procured these services as follows: ASEP No. of days on which offers accepted No. of offers accepted Quantity accepted Weighted average price (p/kwh) Apr-14 None May-14 None Jun-14 None Jul-14 None Aug-14 None Sep-14 None Oct-14 None Nov-14 None Dec-14 None Jan-15 None Feb-15 None Mar-15 None National Grid 16 April 2015

17 4. Entry Capacity Management The purpose of an entry capacity management service is to enable National Grid Gas to efficiently manage entry capacity rights. Entry capacity holdings may need to be reduced to either efficiently manage capacity risk exposure or to reduce holdings, and thereby manage flows onto the system. National Grid Gas may buyback entry capacity from Users via the Gemini entry capacity system or it may enter into Capacity Management Agreements (CMAs). National Grid may develop further services or enter into contracts that will enable it to better manage both its operational and commercial risks. Service Component CMAs Options Agreements For the period 1 April March 2015, National Grid Gas procured these services as follows: Period ASEP Total Quantity Accepted (kwh) Cost of Option ( ) Apr-14 None 0 0 May-14 None 0 0 Jun-14 None 0 0 Jul-14 None 0 0 Aug-14 None 0 0 Sep-14 None 0 0 Oct-14 None 0 0 Nov-14 None 0 0 Dec-14 None 0 0 Jan-15 None 0 0 Feb-15 None 0 0 Mar-15 None National Grid 17 April 2015

18 4. Entry Capacity Management The purpose of an entry capacity management service is to enable National Grid Gas to efficiently manage entry capacity rights. Entry capacity holdings may need to be reduced to either efficiently manage capacity risk exposure or to reduce holdings, and thereby manage flows onto the system. National Grid Gas may buyback entry capacity from Users via the Gemini entry capacity system or it may enter into Capacity Management Agreements (CMAs). National Grid may develop further services or enter into contracts that will enable it to better manage both its operational and commercial risks. Service Component CMAs Forwards Agreements For the period 1 April March 2015, National Grid Gas procured these services as follows: ASEP Quantity utilised Total Cost of Forward Buybacks ( ) Apr-14 None 0 0 May-14 None 0 0 Jun-14 None 0 0 Jul-14 None 0 0 Aug-14 None 0 0 Sep-14 None 0 0 Oct-14 None 0 0 Nov-14 None 0 0 Dec-14 None 0 0 Jan-15 None 0 0 Feb-15 None 0 0 Mar-15 None National Grid 18 April 2015

19 4. Entry Capacity Management The purpose of an entry capacity management service is to enable National Grid Gas to efficiently manage entry capacity rights. Entry capacity holdings may need to be reduced to either efficiently manage capacity risk exposure or to reduce holdings, and thereby manage flows onto the system. National Grid Gas may buyback entry capacity from Users via the Gemini entry capacity system or it may enter into Capacity Management Agreements (CMAs). National Grid may develop further services or enter into contracts that will enable it to better manage both its operational and commercial risks. Service Component CMAs Options Utilisation For the period 1 April March 2015, National Grid Gas procured these services as follows: ASEP Quantity utilised Total Cost of utilisation (exercise) ( ) No. of days on which option exercised Apr-14 None May-14 None Jun-14 None Jul-14 None Aug-14 None Sep-14 None Oct-14 None Nov-14 None Dec-14 None Jan-15 None Feb-15 None Mar-15 None National Grid 19 April 2015

20 4. Entry Capacity Management The purpose of an entry capacity management service is to enable National Grid Gas to efficiently manage entry capacity rights. Entry capacity holdings may need to be reduced to either efficiently manage capacity risk exposure or to reduce holdings, and thereby manage flows onto the system. National Grid Gas may buyback entry capacity from Users via the Gemini entry capacity system or it may enter into Capacity Management Agreements (CMAs). National Grid may develop further services or enter into contracts that will enable it to better manage both its operational and commercial risks. Service Component Flow Management Agreements For the period 1 April March 2015, National Grid Gas procured these services as follows: ASEP Total Cost ( ) Apr-14 None 0 May-14 None 0 Jun-14 None 0 Jul-14 None 0 Aug-14 None 0 Sep-14 None 0 Oct-14 None 0 Nov-14 None 0 Dec-14 None 0 Jan-15 None 0 Feb-15 None 0 Mar-15 None National Grid 20 April 2015

21 5. Exit Capacity Management The purpose of an exit capacity management service is to enable the system to accommodate gas flows in accordance with Users exit capacity rights. In the event of desired exit flows exceeding capability, National Grid may procure a range of demand/supply side services in order to achieve the desired changes in gas flows. National Grid Gas may buyback exit capacity from Users via the Gemini exit capacity system or it may enter into Capacity Management Agreements (CMAs), to manage NTS exit constraints and/or Network Gas Supply Emergencies. National Grid may develop further services or enter into contracts that will enable it to better manage both its operational and commercial risks. Service Component Buybacks on Gemini For the period 1 April March 2015, National Grid Gas procured these services as follows: ASEP No. of days on which offers accepted No. of offers accepted Quantity accepted Weighted average price (p/kwh) Apr-14 None May-14 None Jun-14 None Jul-14 None Aug-14 None Sep-14 None Oct-14 None Nov-14 None Dec-14 None Jan-15 None Feb-15 None Mar-15 None National Grid 21 April 2015

22 5. Exit Capacity Management The purpose of an exit capacity management service is to enable the system to accommodate gas flows in accordance with Users exit capacity rights. In the event of desired exit flows exceeding capability, National Grid may procure a range of demand/supply side services in order to achieve the desired changes in gas flows. National Grid Gas may buyback exit capacity from Users via the Gemini exit capacity system or it may enter into Capacity Management Agreements (CMAs), to manage NTS exit constraints and/or Network Gas Supply Emergencies. National Grid may develop further services or enter into contracts that will enable it to better manage both its operational and commercial risks. Service Component CMAs Options Agreements For the period 1 April March 2015, National Grid Gas procured these services as follows: Period ASEP Total Quantity Accepted (kwh) Cost of Option ( ) Apr-14 None 0 0 May-14 None 0 0 Jun-14 None 0 0 Jul-14 None 0 0 Aug-14 None 0 0 Sep-14 None 0 0 Oct-14 None 0 0 Nov-14 None 0 0 Dec-14 None 0 0 Jan-15 None 0 0 Feb-15 None 0 0 Mar-15 None National Grid 22 April 2015

23 5. Exit Capacity Management Procurement Guidelines Report The purpose of an exit capacity management service is to enable the system to accommodate gas flows in accordance with Users exit capacity rights. In the event of desired exit flows exceeding capability, National Grid may procure a range of demand/supply side services in order to achieve the desired changes in gas flows. National Grid Gas may buyback exit capacity from Users via the Gemini exit capacity system or it may enter into Capacity Management Agreements (CMAs), to manage NTS exit constraints and/or Network Gas Supply Emergencies. National Grid may develop further services or enter into contracts that will enable it to better manage both its operational and commercial risks. Service Component CMAs Forwards Agreements For the period 1 April March 2015, National Grid Gas procured these services as follows: ASEP Quantity utilised Total Cost of Forward Buybacks ( ) Apr-14 None 0 0 May-14 None 0 0 Jun-14 None 0 0 Jul-14 None 0 0 Aug-14 None 0 0 Sep-14 None 0 0 Oct-14 None 0 0 Nov-14 None 0 0 Dec-14 None 0 0 Jan-15 None 0 0 Feb-15 None 0 0 Mar-15 None National Grid 23 April 2015

24 5. Exit Capacity Management The purpose of an exit capacity management service is to enable the system to accommodate gas flows in accordance with Users exit capacity rights. In the event of desired exit flows exceeding capability, National Grid may procure a range of demand/supply side services in order to achieve the desired changes in gas flows. National Grid Gas may buyback exit capacity from Users via the Gemini exit capacity system or it may enter into Capacity Management Agreements (CMAs), to manage NTS exit constraints and/or Network Gas Supply Emergencies. National Grid may develop further services or enter into contracts that will enable it to better manage both its operational and commercial risks. Service Component CMAs Options Utilisation For the period 1 April March 2015, National Grid Gas procured these services as follows: ASEP Quantity utilised Total Cost of utilisation (option+exercise) ( ) No. of days on which option exercised Apr-14 None May-14 None Jun-14 None Jul-14 None Aug-14 None Sep-14 None Oct-14 None Nov-14 None Dec-14 None Jan-15 None Feb-15 None Mar-15 None National Grid 24 April 2015

25 5. Exit Capacity Management The purpose of an exit capacity management service is to enable the system to accommodate gas flows in accordance with Users exit capacity rights. In the event of desired exit flows exceeding capability, National Grid may procure a range of demand/supply side services in order to achieve the desired changes in gas flows. National Grid Gas may buyback exit capacity from Users via the Gemini exit capacity system or it may enter into Capacity Management Agreements (CMAs), to manage NTS exit constraints and/or Network Gas Supply Emergencies. National Grid may develop further services or enter into contracts that will enable it to better manage both its operational and commercial risks. Service Component Flow Management Agreements For the period 1 April March 2015, National Grid Gas procured these services as follows: Exit Point Total Cost ( ) Apr-14 None 0 May-14 None 0 Jun-14 None 0 Jul-14 None 0 Aug-14 None 0 Sep-14 None 0 Oct-14 BAGLANBAYPS 145,000 Nov-14 None 0 Dec-14 None 0 Jan-15 None 0 Feb-15 None 0 Mar-15 None National Grid 25 April 2015

26 6. Gas Balancing The purpose of a gas balancing system management service is to enable National Grid, acting in its role as residual system balancer, to balance the gas inputs to and offtakes from the NTS, within acceptable levels. In order to achieve the desired gas flows, National Grid may carry out prompt gas trades or enter into forwards/options energy contracts ( non-gas-trade tools which may be used for achieving gas balance are covered under entry capacity management and exit capacity management ). Service Component OCM trades National Grid trades on the ICE Endex On-the-day Commodity Market (OCM) day ahead and/or within day to resolve imbalances. OCM trades are deployed to achieve both national system balance and to meet localised requirements. For national system requirements, National Grid trades in all three OCM markets i.e. physical, title and locational. For localised requirements, National Grid only trades in the locational market. During the period 1 April 2014 to 31 March 2015, National Grid carried out the following OCM trades: 2015 National Grid 26 April 2015

27 6. Gas Balancing The purpose of a gas balancing system management service is to enable National Grid, acting in its role as residual system balancer, to balance the gas inputs to and offtakes from the NTS, within acceptable levels. In order to achieve the desired gas flows, National Grid may carry out prompt gas trades or enter into forwards/options energy contracts ( non-gas-trade tools which may be used for achieving gas balance are covered under entry capacity management and exit capacity management ). Service Component OCM Title trades to address a National Requirement National 'NBP Title' Trades No Of Days on Which Trades Accepted Number of Trade Buys Number of Trade Sells Quantity Purchased Quantity Sold Purchase Cost ( ) Sell Revenue ( ) Apr ,868, ,484,661 3,645,324 5,534,669 May ,860, ,859,761 7,632,296 1,942,318 Jun ,486, ,712,613 1,441,933 2,916,746 Jul ,509, ,101,971 3,228,143 2,247,737 Aug ,615,489 89,240,123 4,206,930 1,235,546 Sep ,336, ,510,185 5,861,088 3,523,022 Oct ,543, ,340,191 6,421,013 2,000,751 Nov ,153,079 63,537,795 6,965,928 1,130,747 Dec ,939, ,781,474 7,095,333 2,717,518 Jan ,450,934 33,058,409 2,931, ,896 Feb ,958,604 66,585,733 6,519,619 1,133,522 Mar ,986,827 59,464,107 1,950, , National Grid 27 April 2015

28 6. Gas Balancing The purpose of a gas balancing system management service is to enable National Grid, acting in its role as residual system balancer, to balance the gas inputs to and offtakes from the NTS, within acceptable levels. In order to achieve the desired gas flows, National Grid may carry out prompt gas trades or enter into forwards/options energy contracts ( non-gas-trade tools which may be used for achieving gas balance are covered under entry capacity management and exit capacity management ). Service Component OCM Physical trades to address a National Requirement No. of days on which trades accepted No. of Trade buys No. of Trade sells Quantity Purchased National Physical Trades Quantity Sold Purchase cost ( ) Sell revenue ( ) Weighted Average Purchase Price (p/kwh) No OCM Physical trades were conducted in this period to address a National Requirement. Weighted Average Sell Price (p/kwh) OCM Locational trades to address a National Requirement No. of days on which trades accepted No. of Trade buys No. of Trade sells National Locational Trades Quantity Purchased Quantity Sold Purchase cost ( ) Sell revenue ( ) Weighted Average Purchase Price (p/kwh) No locational trades were conducted in this period to address a National Requirement Weighted Average Sell Price (p/kwh) 2015 National Grid 28 April 2015

29 6. Gas Balancing The purpose of a gas balancing system management service is to enable National Grid, acting in its role as residual system balancer, to balance the gas inputs to and offtakes from the NTS, within acceptable levels. In order to achieve the desired gas flows, National Grid may carry out prompt gas trades or enter into forwards/options energy contracts ( non-gas-trade tools which may be used for achieving gas balance are covered under entry capacity management and exit capacity management ). Service Component OCM Locational trades to address a Localised Requirement No. of days on which trades accepted No. of Trade buys No. of Trade sells Quantity Purchased Locational Trades Quantity Sold Purchase cost ( ) Sell revenue ( ) Weighted Average Purchase Price (p/kwh) Weighted Average Sell Price (p/kwh) No locational trades were conducted in this period to address a National Requirement 2015 National Grid 29 April 2015

30 7. OCM Collateralisation Costs National Grid Gas, in its role as the residual system balancer, is required to provide collateralisation to ICE Endex in order to utilise the OCM for system balancing purposes. The costs incurred by National Grid Gas to provide the collateralisation are recovered from the Users through a balancing neutrality charge. For the period 1 April 2014 to 31 March 2015, National Grid Gas incurred OCM collateralisation costs of 115, National Grid 30 April 2015